If you are a renter in Illinois caught in the crossfire of a foreclosure, a new state law can help you stay in the home through the end of your lease or, if you have a month-to-month or week-to-week agreement, provide you with some much needed extra time to find another place to live. Read on to find out how this legislation is meant to protect Illinois renters who are often innocent victims when their landlord goes through a foreclosure.
(To learn the ins and outs of the foreclosure process, visit our Foreclosure Center.)
In Illinois, foreclosures are judicial, which means the lender must foreclose through the state court system. The lender initiates the foreclosure by filing a complaint and having it served on the borrower, along with a summons to appear in court. The lender also records a lis pendens in the county records.
(Learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, in Nolo’s article Will Your Foreclosure Take Place In or Out of Court?)
(To find out more about foreclosure laws in Illinois, see Summary of Illinois' Foreclosure Laws.)
On August 21, 2013, Illinois Governor Pat Quinn signed Senate Bill 56 (SB 56), which was codified at 735 ILCS 5/9-207.5, a new law protecting Illinois renters in foreclosed properties. The law requires anyone who acquires residential property through a foreclosure to honor their tenants’ existing leases or provide sufficient notice so the renters can find new housing.
Specifically, the law states that, in the case of a foreclosure, the landlord may terminate a bona fide lease only:
A bona fide lease means a residential lease in which all of the following are true.
(Learn more about specific Illinois Foreclosure Laws and Procedures.)
Prior to 2009, most renters lost their leases if the landlord went through foreclosure. Generally, the rule in most states was that if the mortgage was recorded before the lease was signed, the lease would be eliminated in the foreclosure. As a result, tenants in foreclosed buildings became a month-to-month renters, and the new owner could then terminate the tenancies after providing proper notice according to state law. (Learn more in Nolo’s Evictions and Terminations area.)
Then on May 20, 2009, President Obama signed into law the Protecting Tenants at Foreclosure Act. Under this Act, the tenant was permitted to stay at least until the end of the lease, and month-to-month tenants were entitled to 90 days' notice before having to leave the property. (Though if the buyer at the foreclosure sale intended to occupy the property, the lease could be terminated with 90 days' notice.) Unfortunately, the Protecting Tenants in Foreclosure Act of 2009 expired on December 31, 2014. SB 56, however, still applies. (To learn more about tenant’s rights in foreclosure, read Nolo’s article Renters in Foreclosure: What Are Their Rights?)
In 2012, Governor Quinn introduced the Illinois Foreclosure Prevention Network (IFPN), a free resource, to help struggling homeowners through the foreclosure process and evaluate various options for staying in their homes. While the IFPN is geared to help homeowners, renters too may benefit from the service. Visit the IFPN website at www.keepyourhomeillinois.org or call the hotline at 855-KEEP-411 if you have questions about foreclosure.
To learn more about tenants’ rights, see Nolo’s Renters' & Tenants' Rights area.
For more articles on foreclosure in Illinois, visit our Illinois Foreclosure Law Center.